Mortgage bankers push for conforming loan limit extension

Mortgage Bankers Association CEO David Stevens sent a letter to House leaders Thursday urging lawmakers to extend the elevated conforming loan limits for government-backed mortgages.
In 2008, Congress allowed Fannie Mae, Freddie Mac and the Federal Housing Administration to guarantee or buy mortgages worth as much as $729,750 in most neighborhoods. The limits will expire Oct. 1 and drop to $625,500, varying by county.
Stevens, the former director of the FHA, said he would like to see the limits extended through the end of 2012.
"While we had hoped improved economic conditions could warrant a return to the loan limits established by the Housing and Economic Recovery Act of 2008, the reality is that the temporarily higher loan levels are still needed. A number of bills have been introduced that would extend these limits and we urge Congress to address this important issue," Stevens said in the letter to Rep. John Boehner (R-Ohio) and Rep. Nancy Pelosi (D-Calif.).
Rep. John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.) introduced just such a bill last week, which would extend the limits for another two years.
Extending the limits would run contrary to what the Obama administration proposed when it released its white paper on the future of housing finance in February. Officials suggested to Congress that the first step toward winding down Fannie and Freddie would be to allow the loan limits to expire in October.
But mortgage originations are set to fall to around $1 trillion in 2011 with new home sales falling 23% and existing home sales slipping 13% from last year, according to the MBA.
"The temporary loan limits authorized by Congress have benefited consumers and the housing market during what has been a turbulent period for our nation’s economy," Stevens said. "That decline is not over yet."
Write toJon Prior.
Follow him on Twitter @JonAPrior.

This month inHousingWire magazine

While other state and federal regulatory bodies overlap in their regulation of the mortgage industry, the very particular consumer focus of the CFPB is not duplicated by any other body. Will deregulation mean a return to the Wild West lending atmosphere that led to the financial crisis? What happens next? We asked John Socknat, partner at Ballard Spahr, to weigh in on what mortgage lenders and servicers can expect from a Trump administration.

Feature

Amid the potential new direction from the White House, Congress and regulators, leadership in our industry is more important than ever. Which is why HousingWire is proud to present the 40 winners of our 2016 Vanguard award. These leaders from all segments of the mortgage ecosphere demonstrate that our industry is more than capable of meeting the challenges that lie ahead.

Commentary

The marketplace is full of hard and private money lenders — it will come down to who can best assist investors in completing their goals, whether that be by providing quicker close times, or with more accurate valuations. With how many options there are for borrowers, lenders will need to start competing for marketshare as borrowers shop their situations to multiple lenders, leveraging the offers against each other. This process will force lenders to update their guidelines, or be forced out of the market.